CYPRUS: Gov’t eyes new bills for alternative funds

 * Relaxed regulations to attract more investors *

The government plans to introduce new bills which aim to further strengthen the alternative investment funds sector, Finance Minister Harris Georgiades announced at the 3rd Cyprus International Funds Summit.

The event, organised by the Cyprus Investment Promotion Agency (CIPA) with the support of the International Capital Market Association (ICMA), took place in Limassol at a time when the European asset management sector is experiencing a continuous growth. The net sales of European investment funds have risen to all-time highs, with assets under management exceeding 12 trillion euros, delegates were told.

This year, the summit saw 40 speakers and 450 participants from 23 countries and was attended by the President of the Cyprus Securities and Exchange Commission, Demetra Kalogerou, the Senior Regulatory Policy Advisor of EFAMA, Agathi Pafili, as well as other investment advisors, representatives of investment funds, banks, audit firms etc.

In his speech, Georgiades said that the new bills concern, among others, alternative investment funds and provide for the introduction of investment funds which will be subject to fewer regulatory obligations – a fact that will allow for the faster creation and management of funds. The bills will also introduce the option for limited partnerships which is expected to have a catalytic effect in attracting alternative investment funds. The bills are at the stage of legal vetting and the aim is to have them submitted to the Council of Ministers in November.

The Minister said that favourable factors as the country’s improved fiscal situation and tax certainty, complement the efforts of the industry and are enabling Cyprus to make strides as a modern and attractive investment fund jurisdiction”. He also focused on the effort made by the industry and the government to improve the legal and administrative framework.

“This has enabled Cyprus to start gaining recognition as an attractive fund domicile with a potential for further significant growth”, Georgiades said.

Georgiades continued that the promotion of the sector is a result of a collective effort between the state, CIFA and CySEC, which aims to establish the best possible legal and institutional framework to govern the sector.

He also referred to other future reforms, as the establishment of a new specialised Commercial Court and a major investment in e-justice, the establishment of a new independent and unified supervisory authority for the insurance and pension fund sector and the simplification of licensing procedures for new investment.

The President of the Cyprus Investment Funds Association (CIFA), Angelos Gregoriades, analysed the challenges following Brexit and the opportunities arising from the strengthened relationship between Cyprus and China, whose investment fund sector amounts to 7 trillion euros.

Gregoriades also analysed the provisions of the new legislative regulations which will be introduced in order to render the sector more attractive, highlighting that the registration of investment funds will now be done in a much shorter period of time. With respect to the measures CIFA shall take to help the sector adapt to the new reality, Gregoriades announced that a special technical committee has been created to prevent money-laundering, as well as a special technical committee for FinTech matters.

Gregoriades noted that the development of the private equity funds sector remains a priority, while another growth area for funds is the creation of financial products, particularly regarding shipping and aviation.

In his speech, CIPA Chairman Christodoulos Angastiniotis referred to the collective effort to update the legal and regulatory framework of Cyprus which, together with the robust network of financial and professional service providers and the sector’s competitive advantage, led to a renewed investment focus.

Angastiniotis explained that CIPA’s participation comes under the Agency’s aim to strengthen and promote emerging sectors of the economy, as a means to strengthen the country’s competitiveness. As he explained, the ultimate goal is to attract foreign direct investments which will contribute to a viable and long-term economic growth.